Important because they permit a firm to translate superior skill/productive capability in a given product line into complementary products.
Product line effective because it capitalises on:
- Product development capabilities;
- Distribution network;
- Marketing.
Economies of scope concept plays an important role in managerial decision making because it offers the potential of current and prospective lines of business.
It leads to definition of those areas in which the firm has a comparative advantage/profit margin.
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